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Tuesday, 3 February 2009
Page: 51

Ms JULIE BISHOP (Deputy Leader of the Opposition) (5:39 PM) —Given the dramatic change in Australia’s economic landscape over the last 12 months, the Rudd government ought to have a coherent and measured economic strategy to deal with the challenges of a slowing economy and rising unemployment. After all, what the government announced today will result in a turnaround from a budget surplus of $22 billion, or 1.5 per cent of GDP, to a budget deficit of $22.5 billion, or 1.9 per cent of GDP. This is, astoundingly, a financial performance that will be worse than Whitlam’s 1975 budget, when he turned a surplus of 0.3 per cent of GDP into a deficit of 1.8 per cent of GDP—worse than Whitlam!

The government’s policy responses to date—including the unlimited bank guarantee; the $10.4 billion spending package, known throughout the media as the ‘cash splash’; the ‘Ruddbank’, to prop up the commercial property market; and now a $42 billion spending package—give little confidence. The last time we heard a proposal similar to the ‘Ruddbank’ was after the 1987 stock market crash, when the state Labor government in Western Australia intervened to prop up the commercial property market. That was the beginning of WA Inc and a royal commission and litigation that still engulfs the state to this day.

The Prime Minister constantly says that the times are unprecedented and that this calls for unprecedented action. But the fact that we face great challenges does not mean that anything goes. More than ever, this is a time to embrace the fundamental principles of sound economic management, not abandon them. More than ever, this is a time to heed the lessons of history, not ignore them. More than ever, this is a time to harness comprehensive analysis, not avoid it. Yet that is precisely what the government is doing with its panicked response to an economic downturn. A calm and measured government policy response would encapsulate the adage: ‘Do no harm’—in other words, do not make things worse by ill-considered and ill-timed policies; take a ‘no regrets’ approach. The government should ensure that the current responses sow the seeds of a sustained recovery rather than lurch Australia towards recession.

The latest policy from the government, in the form of this $42 billion spending package to address the prospect of rising unemployment, follows the form of its previous policies. There is too little evidence, too little analysis and too little substance to support the government’s decisions. Instead, as is always the case with this government, the policy has been introduced without regard to the evidence and without regard to the analysis that suggests much of the policy, designed to stimulate the economy and create jobs, is doomed to failure. In a fashion that is becoming a hallmark of this government, today’s policy has been introduced in haste, without consultation with the opposition, and with a demand that the measures in it, costing taxpayers $42 billion, be rubber-stamped by the opposition by Thursday. The Prime Minister says, ‘Take it or leave it.’ The Prime Minister says, ‘My way or the highway.’ The opposition will not be bullied on this matter. We have seen the government fail so often on other policies in the last year. We will scrutinise this latest policy line by line to see whether it will protect and create Australian jobs.

The release today of an updated economic and fiscal outlook is well overdue, but at least the government has finally responded to the coalition’s constant requests for the government to keep the public informed about current forecasts for the Australian economy and the government’s financial position. A couple of weeks ago the Treasurer said that the mid-year economic forecasts were wrong—and he did nothing to correct them. He took no action to provide updated forecasts. What kind of confidence does it give to the business investment community when the government says, ‘The forecasts upon which you are relying are wrong, but we will not give you the information that we, the government, have.’

At last, today, the government, after constant pressure from the coalition, produced some forecasts—importantly, for unemployment, for growth and for the state of the budget. The coalition, the Leader of the Opposition and I have stated repeatedly that this year, 2009, must be about jobs, jobs, jobs: creating, protecting and securing Australian jobs. The outlook today forecast that unemployment will rise. It is currently 4.5 per cent. Members will recall that it did drop to 3.9 per cent in February last year, taking into account the lag indicator. But the outlook forecast that unemployment will rise from 4.5 per cent currently to seven per cent in 2009-10. There is clearly an urgent need for the government to make protecting and creating Australian jobs its highest priority—its absolute priority.

Let us have a look at how effective the government’s policies have been to date in terms of the promises that they have made to the Australian people about job creation. The government told the Australian people that the $10.4 billion stimulus package last December ‘will create’ up to 75,000 additional jobs over 2009. That translates into a cost to taxpayers of $139,000 per job. The government claimed that the infrastructure package of $4.7 billion ‘will create’—these are their words—32,000 jobs. That represents a cost to taxpayers of $147,000 per job. The government claimed that their COAG package of $15.1 billion ‘will create’—not ‘support’ or ‘help’ or ‘assist’—133,000 jobs. That represents a cost to taxpayers of $114,000 per job.

The government now claim that the new $42 billion package will create 90,000 jobs over the next two years, at a cost of $461,000 per job, or $230,500 per job per year. But, as members saw in question time today, when we asked the Prime Minister to not just identify the whole total of the jobs but name just one place where one job has been created as a result of their policies, ministers could not name one. They did not answer the questions. So, as members can see, the cost per job is rising significantly, but the analysis and the evidence to support the government’s policies are still missing in action. After two months, they cannot point to one additional job that has been created anywhere in the Australian economy as a result of that cash splash of $10.4 billion of taxpayers’ money. The Updated Economic and Fiscal Outlook tells us that the first stimulus package—this is what the government say—‘is already providing support for growth’, but then no supporting evidence is provided. Where are those additional 75,000 new jobs? Two months into the policy, the money has been spent. How many jobs have been created?

These are vital questions, as the efficacy of such spending and these policies as a means of stimulating the economy and creating jobs has been questioned. The efficacy of this has been questioned time and time again, particularly, currently, overseas as other governments struggle with these challenges. If the truth is that the first stimulus package has had little or no effect, or if the government does not know what its effect has been, then why is it repeating the same policy formula in today’s announcement?

The $12.7 billion of the new package is to be spent on bonuses similar to those provided in the first package. Similarly, the coalition has made it clear that public expenditure on physical infrastructure requires serious assessment of each project. It is important that the government not panic and choose projects which have superficial appeal but which are poor choices in promoting long-run economic growth and promoting the welfare of the Australian people. (Time expired)